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8 Nov 2015    Journal Articles
Egger, Peter , Francois, Joseph


The Role of Goods-Trade Networks for Services-Trade Volume

The Role of Goods-Trade Networks for Services-Trade Volume

WTI discussion papers - Peter H. Egger, Joseph Francois and Douglas R. Nelson World Economy, 2015 (published online, print version forthcoming)


Abstract

In this paper, we address the role of countries’ goods-trade networks for their services-trade volume. The paper employs a large cross section of bilateral trade data on aggregate cross-border goods and services sales and illustrates that the depth and overlap of two countries’ services networks induce a positive direct impact on their services-trade volume. The evidence takes into account that goods trade flows and networks are potentially endogenous so that the estimated direct effects support a causal interpretation. We find that the magnitude of the multilateral goods-trade network effect on the bilateral services-trade volume is much larger than that of bilateral goods-trade volume.


The Role of Goods-Trade Networks for Services-Trade Volume